Overview of EthSign's new product TokenTable: How can Web3 teams efficiently and compliantly manage tokens?

Source: EthSign

EthSign officially announces the launch of the first vertical scenario connecting legal agreements with smart contracts, TokenTable. TokenTable is a token ownership registration and distribution platform aimed at Web3 startups and DAOs.

In the past two weeks, several projects including Biconomy, CyberConnect, Impossible Finance, and Delysium have begun managing their token allocations on TokenTable, and you can register here for access to the Closed Alpha version.

Token-Based Capital Markets

Token-based capital markets are truly global markets that open doors to a vast number of retail investors distributed around the world. Tokens are a new form of asset that has been very popular since their inception. Tokens with various utilities are continuously issued into this market and are traded among users, investors, and speculators. A token can serve as a certificate for any asset registered on the blockchain.

As the token market continues to standardize, liquidity improves, and new tech company stocks and physical assets are more likely to enter the capital market in the form of tokens. Currently, the total market capitalization of various tokens has exceeded one trillion dollars, and optimistically, tokens will soon become the largest asset pool.

Token-based capital markets have the following new characteristics:

• The number of investors in projects has multiplied, and party rounds are very common and encouraged in this market; as the quota is shared among more investors, the average investment amount decreases, leading to an increase in the number of portfolios for each investor; managing stakeholders and portfolios becomes more complex and fragmented.
• High degree of globalization, allowing early projects to receive support from investors in different countries, but this brings greater legal operational complexity.
• Legal enforcement is not entirely effective. The token market is developing rapidly, and regulators struggle to keep up, resulting in generally loose agreements. Investors, community contributors, and early employees are often exposed to performance risks as they invest first and receive tokens later.

TokenTable

TokenTable is a token management platform that helps founders, investors, and community contributors manage their uncirculated tokens. The entire project is mainly divided into two parts: Pre-TGE and Post-TGE.

Pre-TGE

• Register and manage ownership on TokenTable. TokenTable provides founders with a dashboard to manage token allocation and a complete list of stakeholders; all stakeholders can clearly understand and manage their unlocked assets in various projects.
• Raise funds and issue token grants on TokenTable. TokenTable helps founders manage fundraising progress, send agreements and transfer documents in bulk; once investors sign agreements (supported by EthSign Signatures) and successfully transfer funds, they will automatically appear on TokenTable. Token grants for employees and community contributors are similar.

Post-TGE

TokenTable provides a complete smart contract token unlocking solution, and stakeholders will receive email notifications when tokens are unlocked, allowing them to conveniently claim tokens to their wallets on the platform. We are also designing a portfolio management dashboard for investors to manage multiple tokens simultaneously and generate statistics.

TokenTable is connecting legal agreements with smart contracts in a vertical scenario through SaaS, providing data credibility, smart contract execution, and cryptocurrency payments on-chain, while ensuring legal compliance and compatibility with legacy systems off-chain. The popularization of TokenTable essentially transfers the ownership ledger of a project before the issuance of tokens from a founder's personal management Excel sheet to a smart contract, with a market scale equivalent to the entire primary market's funding amount.

Web3-native

TokenTable is inspired by Balaji Srinivasan’s article Mirrortable, where Balaji discusses in detail how to manage a physical company's cap table using on-chain ledgers.

TokenTable is Web3-first, meaning we temporarily overlook the complexities of traditional equity and provide a management platform for Web3 projects and DAOs issuing tokens. Compared to traditional equity, tokens do not differentiate between ordinary/preference and are not affected by different jurisdictional rules, making them simpler and more direct.

Strategically, we will strive to promote the adoption of TokenTable in the Web3 world, and once compliance barriers are removed, more traditional companies will choose to tokenize their equity and enter the token market, at which point we will adapt.

Other Ongoing Work:

ENS Subdomain Management System

A system serving an organization requires access control, and the current private key wallet system does not support such simple functionality well. We plan to establish a subdomain system based on ENS NAME Wrapper to facilitate better permission control for founding teams and investor teams. Specifically, access and operational rights will be based on ENS rather than addresses; for example, if Alice manages EthSign's TokenTable using admin.ethsign.eth, when she leaves, EthSign will change the resolution of this ENS subdomain to her successor's address, and Alice will lose all permissions. We are designing such a subdomain management system based on ENS and will open it up as a public infrastructure.

Compliance

We are collaborating with top law firms in the U.S., Singapore, and Hong Kong to provide founders with financing agreement templates and entity establishment advice, reducing their compliance concerns in the early stages of projects; on the product side, TokenTable generates tax forms for community contributors and employees to facilitate their reporting of token-related taxes.

Co-managing TokenTable

According to general rules, changes to TokenTable should be decided collectively by all stakeholders. In the future, TokenTable can help founders solicit and record stakeholder consent for new plans. For example, if a project currently has 15% owned by the founding team, 15% owned by investors, and 70% reserved, if the founder plans to allocate 15% from the reserved 70% for the next round of financing, TokenTable can quickly send this change proposal to all investors and solicit and record their consent. If it is not approved, the founder will have to revise the proposal again.

FutureToken

Similar to certificates from Carta, stakeholders in TokenTable can mint FutureToken NFTs to their wallets as a certificate. In the future, we may use FutureToken as proof for claiming already unlocked tokens and open a trading market for FutureTokens, but before that, we still have some compliance issues to resolve.

TGE

TokenTable is working hard to attract more users by providing end-to-end solutions, such as helping teams generate and unlock tokens (TGE) based on existing data on TokenTable. Project teams no longer need to independently create new token and unlocking terms smart contracts; they can focus on their products and business itself, and we will release more updates regarding TGE services in a timely manner.

Ecosystem Opportunities

TokenTable will become the infrastructure for network states, serving as a platform for token ownership registration and distribution. While promoting applications, we are also actively building an ecosystem and collaborating with other projects. For example, TokenTable can serve as the infrastructure for the following types of projects:

• Crypto Crunchbase. TokenTable provides real investment and financing, and token unlocking data, which can be disclosed to the public by data service websites with the permission of the founding team.
• Marketplace. FutureToken is a futures derivative of unlocked tokens in NFT form, which can be collateralized, received, and traded with the consent of the founding team.
• Financial Audit. The data and smart contracts from TokenTable can help exchanges and public offering platforms better understand the distribution and unlocking status of a token. Before TokenTable, these platforms had to take the risk of trusting the authenticity of the data provided by the founding team.
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